Target: ₹2,720

CMP: ₹2,389.50

Data Patterns is an established player in the defence and aerospace electronics industry with experience of more than three decades. The company follows an in-house design and development model with capability to supply both sub-systems and complete products in the areas of Satellites, Radars, Electronic Surveillance & Monitoring and Communication Systems.

Its building block approach (1000+ developed in house) sets it apart from integration based approach followed by many other defence companies. Data Patterns has been scaling up rapidly and had an order backlog of INR 9.7bn as on June-23 (2x TTM revenue).

The Indian defence industry is undergoing a structural shift towards domestic sourcing, development and manufacturing as also rising exports (FY23: c.INR 160bn). The company has repeat order win prospects of ₹2,000-3,000 crore in coming years in its targeted areas.

We expect revenue/EPS CAGR of 32/37 per cent over FY23-25 with improved cash conversion and return ratios. Recent capital raise through QIP has strengthened the balance sheet and gives it the financial muscle to invest in emerging technologies and platforms.

We maintain Buy with price target of ₹2,720 based on 55x Sept’25 EPS.